Sometimes the smaller the better.
For decades, major sports leagues have attempted to place teams in the country’s largest markets in hopes of selling more tickets and sponsorships, as well as satisfying broadcasters who want to reach as many viewers as possible.
But in recent years, leagues have embraced the charms of smaller markets. Teams have moved to cities such as Oklahoma City, Las Vegas and Winnipeg, Manitoba, seeking financial incentives, newer arenas and stadiums and more devoted fans.
In early April, the National Hockey League approved the $1.2 billion sale of the Arizona Coyotes to tech billionaire Ryan Smith and his wife, Ashley. The team, which will change its name, will begin play next season at the Delta Center in Salt Lake City, home of another of the Smiths’ teams, the Utah Jazz of the National Basketball Association.
At first glance, the move could be seen as a step down. The Salt Lake City metropolitan area is less than half the size of Phoenix; Salt Lake City is the 29th largest media market, while Phoenix is the 11th largest media market. Utah has never hosted an NHL team. But the league’s decision was less about Salt Lake City’s size and more about its demographics. Like Phoenix, Salt Lake City is one of the fastest growing cities in the country. But in Utah, a thriving tech industry has attracted an influx of young workers with disposable income.
“People don’t come to Utah just to retire,” Ryan Smith said in an interview. “If you have two states that are growing rapidly, you would always choose the younger one for a future of prosperity.”
Leagues have been “rightsizing” their operations for years with an eye toward making money with fewer fans. The Mets were one of many baseball teams to build smaller stadiums with more exclusive clubs and suites. Citi Field, which opened in 2009, has only 42,000 seats, compared to 55,000 at the team’s previous home, Shea Stadium. Smaller stadiums and arenas are easier to fill (seeing empty seats on TV looks bad) and teams can focus on higher-end concessions, club seats and exclusive “experiences.”
It typically takes several years for a team to prepare for a relocation. But commissioner Gary Bettman said the NHL had to act quickly because the Coyotes needed stable owners and a major league stadium. The team had trouble attracting fans and its finances were in such disarray that the league temporarily took over the club a decade ago. Since arriving from Winnipeg in 1996, the Coyotes have played in a variety of venues. Last season, their home was a college stadium with only 5,000 seats.
But in Salt Lake City, enthusiasm for the new team has been strong. Fans have paid deposits for more than 30,000 tickets in a stadium that seats about half that number. Sixty-four percent of those who signed up had not attended a Utah Jazz game in the past three years, Smith said. While the Coyotes were being overshadowed by NFL, NBA and Major League Baseball teams in Phoenix, the new hockey team was already prominent in Salt Lake City, where it would compete for attention with the Jazz and two football teams. .
“Even though the market is smaller, there may be more innovation, especially because the team is new and there is some excitement around it to ride the coattails,” said Frank Hawkins, a longtime NFL lawyer who is now a consultant for media. “The other thing is you’re moving from a four-team market where your target is winter visitors who probably aren’t from hockey country.”
Salt Lake City and its surrounding counties, on the other hand, are already a winter sports destination. The area has some of the best ski slopes in the country. The city hosted the Winter Olympics in 2002 and aims to do so again in 2034. Many American Olympic teams train in the area.
The broadcast media landscape is also changing. When the NHL relied on broadcasters to broadcast its games nationally over-the-air, the networks wanted to reach the country’s largest markets so they could charge more for advertising. Similarly, cable networks like ESPN look for markets with the largest number of cable subscribers.
But millions of households have been abandoning their cable connections, undermining sports cable networks. In response, Smith had the Jazz start its own direct-to-consumer streaming service and struck new deals with over-the-air stations that reached beyond traditional cable territories.
“With large numbers of people cutting the cord and not picking up the typical cable package, the issue now is how many committed fans will pay more for a streaming product compared to what used to be just the pure size of the market when everyone paid independently. to see the games or not,” said Marc Ganis, a media consultant for numerous sports teams.
The NHL does not rule out returning to Phoenix. Bettman spent decades trying to keep a team there, and the league believes a Phoenix franchise could still succeed with the right owner and arena.
Alex Meruelo, the owner of the Coyotes, will retain the team’s intellectual property, including its logos and registrations. Meruelo could revive the Coyotes if he finds a suitable home and pays a billion-dollar expansion fee (basically what he received for allowing the team to go to Utah) to return to the league.
The league has also considered other markets, including reportedly Atlanta, which has hosted an NHL team twice, and Houston, which had a team in the defunct World Hockey Association.
For now, the league’s focus is on Utah, where the Smiths have just a few months to find a new team name, sell tickets and prepare for the franchise’s first season in a new city.
Maybe fans “see it as an opportunity to start from the beginning with their family and say, ‘This is one of the things we’re going to do,’” Smith said.